The Illinois Real Estate License Act of 2000 (RELA) regulates real estate businesses and ensures the competency of real estate professionals. RELA was created to promote stability in the real estate industry, as well as to protect both the public and real estate professionals alike. Governor J.B. Pritzker has signed certain amendments to RELA that became effective January 1, 2025 and will be repealed in 2030. These changes are important for real estate businesses and professionals to know about and thus ensure compliance with.
What Has Changed?
Brokerage Agreements
Until now there was no requirement in Illinois for brokerage agreements to be in writing, However, as of the effective date of the amendments to RELA, all brokerage agreements between consumers and a Sponsoring Broker must now be in writing, regardless of whether they are exclusive or non-excusive. The new amendments define a “non-exclusive brokerage agreement” as “a written brokerage agreement that provides that the sponsoring broker has the non-exclusive right, through one or more sponsored licensees, to act as an agent or representative of the client for the performance of licensed activities.” This definition was added to reduce confusion and protect both clients and brokers by differentiating and concretely defining the two types of brokerage agreements.
Licensing Updates
As for changes to the process of obtaining a Broker License, the Managing Broker License Exam is no longer required to include a portion focused on national brokerage laws and practices, and the Exam will now only cover requirements for the state of Illinois. This is an intuitive amendment and benefits Brokers who now only have to be knowledgeable of Illinois laws, the laws Brokers actually need to know to run their businesses. The Illinois Department of Financial & Professional Regulation will be updating the pre-licensing course curriculum and exam requirements pursuant to this amendment.
Licensees are now required to disclose their Sponsoring Broker’s compensation policies, including any amount offered to cooperating brokers. Allowing clients to fully know and understand how their broker is compensated, fosters trust and transparency in the brokerage process, which are key to maintaining positive client relationships and a thriving business.
For Brokers licensed in states other than Illinois who are interested in transitioning to Illinois, RELA has shifted from Reciprocal Agreements to an Endorsement process. Real estate professionals outside of Illinois no longer need Illinois to have a specific reciprocal agreement to become licensed in Illinois. This change, however, does not alter the process that Illinois licensees must follow when seeking to become licensed in another state, as this amendment only applies to those seeking to transition to Illinois. The Endorsement Process will require out of state licensees to complete an Real Estate Broker Endorsement Course approved by the Illinois Department of Professional Regulation.. After January 1, 2026, applications for licensure based on reciprocal agreements will no longer be accepted, but reciprocal agreements made prior to January 1, 2026 will remain in force and can be renewed.
Recovery Funds
RELA now requires that a Recovery Fund maintains a minimum balance of $1,000,000 (one-million dollars). This ensures that there are sufficient monetary resources to protect clients in the event that a real estate licensee causes some kind of damage.
Continuing Education
The Core Continuing Education (CE) hours for Brokers and Managing Brokers will increase from four to six hours, with two of these hours being specifically dedicated to Fair Housing training. Further, Diversity, Equity, and Inclusion (DEI) are now potential topics that may be included in elective CE courses. It is imperative for Brokers to understand and comply with the Fair Housing Act (to effectively avoid potential discrimination lawsuits and claims) and any new requirements that have gone or will go into effect within the next few years. Finally, RELA has been amended to clarify that a Pre-License education is only valid for two years after all required coursework has been completed. Individuals looking into becoming licensed real estate professionals will thus have two years to obtain their Brokerage License upon completion of the required educational courses.
It is important to reach out to an attorney with any questions you may have about these changes to RELA in order to ensure your real estate business’s continuing compliance with everchanging Illinois law. The talented and experienced attorneys at Storm & Piscopo, P.C. can help.
Reach out today to set up an initial consultation.
https://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=1364
By Lauren Price
Lauren is a 3rd year law student at Northern Illinois University Law School and a Law Clerk at Storm & Piscopo P.C.